On September 26, 2024, via two decisions, Ungarean v. CNA and MacMiles v. Erie Insurance Company, the Pennsylvania Supreme Court confirmed what we, as an industry, have known since March of 2020 – economic loss alone, with an absence of direct physical loss or damage, does not constitute a covered first party property claim.
The Supreme Court ruled unanimously, reversing the trial and Superior Courts in Ungarean, holding that “the only reasonable interpretation” of direct physical loss or damage was “either (1) a physical disappearance, partial or complete deterioration, or absence of a physical capability or function of the property (loss), or (2) a physical harm or injury to the property (damage).” Adopting this reasoning, the Supreme Court affirmed the Superior Court’s decision reversing the trial court in MacMiles.
We anticipate that this will fully and finally settle the question of what constitutes “direct physical loss or damage” in Pennsylvania.
This post was originally published through Horst Krekstein & Runyon’s Property in 60 Seconds Newsletter. If you would like to receive future copies of that newsletter, please use this link to sign up.